Osram sets Nov. 3 shareholder vote to grant domination to ams

Sept. 23, 2020
Until then, the two companies will have limited ability to integrate operations, even though ams has acquired Osram. They've taken measures they hope lead to a “yes.”

Ams and Osram could finally clear the way for their unfettered integration on Nov. 3, the date that Osram has now set for a vote by Osram shareholders to grant “domination” status to ams’ takeover of the Munich lighting and photonics company.

Premstaetten, Austria-based sensor maker ams acquired Osram on July 9, but came up short of the 75% ownership stake that would have granted it a “domination and profit and loss transfer agreement” (DPLTA) under German law. It had garnered about 69%, a number that has since edged up to around 71%.

Without domination, Osram CEO Olaf Berlien noted earlier this year, the two companies are limited in the information they can share as they discuss synergies. Berlien reiterated in July that “integration can start after the domination agreement.”

Also in July, ams acknowledged that a DPLTA would be the vehicle by which it will best “be able to drive and accelerate the integration and alignment of ams’ and Osram’s businesses in the most efficient way to build a strongly profitable combined company within the next years.”

Under domination, free sharing of information would help the two outfits work out how to combine operations that include crossover and complementary technologies in photonic chips and sensors.

Ams has insisted for months that, short of acquiring 75% of Osram, it could attain domination through the alternative course of a vote by Osram shareholders.

But information on that course of action had been sketchy until yesterday after stock markets closed, when the two companies issued separate announcements stating that Osram has set a Nov. 3 date for an extraordinary general meeting (EGM) of Osram shareholders to grant domination status.

In the ams announcement, CEO Alexander Everke (shown) described domination as an “important step” that would “enable the swift and successful integration of ams and Osram into a combined company that offers profitable growth for the long term.”

For the measure to work, 75% of voters at the virtual EGM must approve a domination agreement that ams and Osram management said they have now worked out. With ams representing 71% ownership, it still faces possible opposition from the 29% of Osram ownership that is outside of ams.

The companies are offering what they hope are financial inducements to win approval. The ams/Osram agreement stipulates that ams will offer to buy shares from other Osram shareholders for €44.65 (currently valued at US$52.19). Osram shares closed on Tuesday at €43.40 ($50.73) per share on the Frankfurt Stock Exchange but had shot up to €49.74 ($58.14) by early afternoon Wednesday, higher than the ams buy offer.

The ams/Osram agreement also offers €2.24 ($2.62) per share in net recurring annual payments to Osram shareholders who do not sell to ams. Osram described the payment as “guaranteed dividend for shareholders of more than five percent.”

For now, Osram and ams continue to trade as two separately listed public companies.

Editor’s note: ams reports financials in US dollars, while Osram reports in Euros. All shares in USD are converted at current value as of time of publication.

MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).

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About the Author

Mark Halper | Contributing Editor, LEDs Magazine, and Business/Energy/Technology Journalist

Mark Halper is a freelance business, technology, and science journalist who covers everything from media moguls to subatomic particles. Halper has written from locations around the world for TIME Magazine, Fortune, Forbes, the New York Times, the Financial Times, the Guardian, CBS, Wired, and many others. A US citizen living in Britain, he cut his journalism teeth cutting and pasting copy for an English-language daily newspaper in Mexico City. Halper has a BA in history from Cornell University.